Janis Zech: Hello, and welcome to another episode of the RevOps Lab Podcast. I'm here with Philip, and today's guest is nobody because we have a episode. The two of us. We wanna talk about one big topic, which is annual planning. I know most of you are probably in the process right now, and so we wanted to, you know, take twenty, twenty five minutes just talk about our experiences and the good, bad, and ugly of annual planning, which I'm sure most of you have lived through it many times. And, yeah, I mean, let's kick off with, you know, what are common pitfalls? What have you seen, Philip?

Philipp Stelzer: Yeah. I mean, let's start with, actually, you know, you're beginning here saying, many of you will probably be in the process already. I think, like, the most common pitfall I've seen is a late start, to the actual annual planning. I've seen annual plannings begin in January, February for the current year. That's so, this happens, I think, more often than one would hope for or imagine. So I think late start, for sure, for me is, like, the biggest issue. And then the other issue is the siloed approach to planning where, basically, you have different teams starting to do planning without talking to each other, then coming together, and then basically spending the whole time of the actual planning sessions just to align the plans that they created separately instead of just, like, trying to find an approach right from the beginning where you don't do that. Like, you don't plan by department or team, but you actually have, like, a shared calendar, a shared process. You have cross functional workshops and stuff like this. So, yeah, those I would say are the, for me at least, the ones I've seen most often and most impactful in terms of, like, really slowing everything down.

Janis Zech: Yeah. I think very related to that is obviously just relying on top down only targets. Right? Like, basically I mean, the CFO typically owns annual planning. RevOps obviously plays a key role for the bottom up planning and, you know, collaborating with the FP&A team. But, you know, like, the CFO basically discussing the annual plan with the CEO, maybe the CRO, and the board, and then coming out and saying, hey. Look here. This is the plan. Obviously, big no no. Not just from, you know, like, how realistic is it, but also, you know, how much buy in you actually create throughout that process. And then I think related to that is then kind of a more naive capacity math. So, like, not, you know, taking into consideration ramp time, fluctuation, tenure. Right? Like, so I think, like, key things that that have big impact on on your plan. And I think those are also some, I think, typical challenges we've seen. With that said, I mean, I'm sure you've all lived through this as well. I mean, let's maybe kick off with, like I mean, obviously, this is a podcast that is mostly listened by revenue operations, right, like, and ops folks. So I think maybe, like, Philip, from your perspective, like, should RevOps play a key role in annual planning from your perspective?

Philipp Stelzer: Yeah. For sure. I mean, because we talked about this many times before, and there are also podcast episodes, actually two podcast episodes on annual planning. If you wanna do, like, a deep dive with somebody, you know, that's not us, episode fifty seven and episode eighty five. But I think, like, the key point from our perspective is that RevOps has this unique position where they sit at, yeah, the intersection of different departments that all revolve around, like, the different, you know, data, the processes, and execution of it around the GTM strategy. So what I mean is this is marketing and sales specifically. And so it makes sense for them to play a key role in driving alignment, helping organize these processes, coming up with different, you know, sort of like models and collecting sort of like the input metrics to calculate these models. They are really in a unique position to manage both, like, the sales side, but also the marketing side, bringing them together and doing that under the overall leadership of, in most cases, like we said, a CFO, could also be the CRO, depending on the organization and the structure. But yeah. So I think they have a lot of credibility. They know the right people. They have a lot of internal exposure and all of this and, like, the analytical capacity. So I think with all of this, yeah, RevOps is the team to help drive annual planning.

Janis Zech: Yeah. But they can't do it alone.

Philipp Stelzer: Yeah. Typically, together with FP&A, right, I think that's, like, the dream team and the ideal state as kind of the project manager and owners. And then, obviously, you have various different stakeholders like the CRO, if you have a CMO or CCO. Right? Like, obviously, the CFO, which is fundamentally then ending in the budget and annual plan to the board. And there's, like, a you know, I mean, I think I'm meant to forget. Right? Like, there's this idea about, like, continuous planning, but there's a formal process here that the board needs to approve a budget. Right? And then, obviously, HR is involved. Right? Because you're basically making hiring decisions, not just for the go to market organization, but the entire company. And then, obviously, you know, enablement ops often also involve the leaders of the team. So it is a bigger group. And I think it starts with, okay, who owns the project management? And then who are basically the stakeholders? And having a clear map of those. Right? And then having also a clear timeline.

Janis Zech: And we had John McMahon here on the show. Right? Like, and I think he very much said, like, one of the key challenges is this late start. And why is that a key challenge? Because when you start late, then you start working on your capacity model, and then you basically started hiring too late, which always has lead time. So, right, I think this is always in context of size of company. Right? So I'd probably say public companies, larger companies, Fortune 500 companies, they probably start annual planning in Q2 already. I think what most typically we see is probably like August, September, right, like doing a preplanning, then the modeling execution prep is like October, November, and then go live is pretty much like finalized, hand in, this obviously December, and then like, you know, kick off in early Jan or December, assuming that like your fiscal year is calendar year. And then if you break that down, right, I think the objective of the preplanning is actually to I mean, outside of, you know, the organizational task, right, who owns it and who are the stakeholders, really becoming very clear on your, like, go to market strategy. Right? Like, actually knowing what you wanna do and agreeing on that, you know, on a higher level. And then going in and in the modeling and execution phase, having the bottom up and the top down plans starting to align ideally. Right? Again, often the thing that's not so easy to do. But if you have this power play of FP&A and RevOps, that's a lot easier. And in that process, there's typically I mean, I would say, like, the capacity planning should be clear already earlier because you need to start hiring. But, yeah, I mean, we'll get to that in a second. So you really like, you arrive at basically, like, specific metrics that you agree on. And then, obviously, the, like, December January period is like you get the approval from the board, you know, and then you also derive execution from the annual plan where we also had a bunch of podcast episodes about, like, how do you take the strategy and then execute against the strategy, operationalize it against your operating cadences, set goals, whether that's OKRs or, you know, managing, like, objectives, whatever you use, basically. And then also kickoffs and check ins and, you know, metrics that you work against as well.

Philipp Stelzer: Yeah. I mean, I think a simple way to think about it is when do you wanna run your sales kickoff, and then kind of, like, go back six months, right, and then start planning. If, like, if your sales kickoff is, like, in the second week of January, then, you know, start six months before that date. Because you'll need it, like, at least, like, a month to prepare the sales kickoff properly, right, if you wanna do it really well and really wanna engage everyone and make sure that people don't leave that with, like, more questions than answers, and really are enabled as a sales force to execute against the plan. So yeah. I mean, just at least plan for six months here, I think.

Janis Zech: Yeah. This is like you do it once a year and then, you know, everybody's enabled and knows exactly what to do. Right?

Philipp Stelzer: Sure. That's just joking. I mean, I think we all know that, like, that's obviously an ongoing effort. But but, yeah, I think that's actually a great way to think about it. Right? And then, you know, why is that important? Because, I mean, right, like, think you really start with your capacity model and kind of your core metrics of where do you sit in the capacity model? Right? Like, what are your specific roles? What is your current ramp time? And I think there I really love this, like, John McMahon comment who said that you need at least four quarters of historical data where nothing has changed to get a feeling for, okay, how is the future looking? Right? So if you think about that, right, like, the capacity model is very much centered around you need to have strong data quality and metrics that you, like, you can trust. So, obviously, that is an ongoing effort, and that should have happened a long, long time ago. And then you look at basically I mean, you can break it into, okay, what are your tenured reps, right, and what are your ramp reps, and what is your attrition. And then you basically start mapping out, okay, what's a realistic, you know, hiring plan. And then that is something you actually have to start executing already in, you know, in this year if you wanna do it for 2026. Because if you don't do that, then you'll basically you're not late with planning. You're actually late with hiring, and the ramp time will hit you, you know, which happens very, very often. And you run behind, and then two people might leave, and then another person leaves, and then you're suddenly on the back foot. And, obviously, that's a bad situation to be in.

Janis Zech: Yeah. Hundred percent. Yeah. And also something. Right? Like, if you have historic data, right, you know, okay, on average, how many like, what's the average tenure? Like, how many of the people I hire, you know, leave within, like, x months after I hired them again? All this stuff. Right? That all plays a huge role. So so it's not just, like, you know, having the input from the marketing team, the CS team, the CRO, FP&A, as you mentioned. There's also, like, HR. Right? You need to kind of, like, get, like, input from the field, from the different operations teams, enablement, and so on, and really, you know, get all the metrics in there in order to calculate these models. How much time does enablement need to prepare something, to develop the training material? How long does it take to prepare, like, this new marketing motion that you wanna run? How much time do you wanna give it? What's your plan B if that marketing motion doesn't work out? Right? Like, how do you shift then the team? How long does it take to hire people and so on and so on and so on? It's huge. It's huge. Right?

Philipp Stelzer: Yeah. Well, it's a huge effort. So maybe, you know, actually, take nine months, take nine months to plan for all of this.

Janis Zech: Yeah. I mean, so I think one of the things that I find often most challenging to plan for is actually pipeline generation. I feel like, you know, this is really, really tough. Right? Like, you have your historicals and, you know, you know, like, what is inbound, outbound, and and partners driving. But at the same time, I feel like this is changing so much. And so it's really, really hard to plan for. And, obviously, your capacity model. Right? Like, you wanna have a balance between pipe gen and who you hire. So I think the advantage of doing this early is you can hire against it. But then at the same time, the disadvantage is you don't have the latest data. Right? Like, and sometimes so I think one good way to think about this is, right, like, you should look at basically your entire funnel, and you should look at that by month and by quarter and then look at, okay, what's the stage conversion rate? One, two, three. What's your win rate? You know, how many people do you hire? How many people do you onboard? And is there a large fluctuation in those? And then if you go further up the funnel, right, like, how many leads are driven by inbound? Let's say that, you know, and you have a clear conversion rate from, like, marketing qualified lead into sales qualified lead and qualified opportunities, you know, outbound and partner. And then look at, you know, the last four quarters and see if you have major jumps and fluctuations. If you have those, right, then obviously, you wanna make sure that, you know, you basically start hiring, but you benchmark against your balance on the pipe gen side. Right? And I think that is that is really a continuous effort. Obviously, right, like, you hand in a budget and the investors expect you to hit your revenues. But what if your revenues you're short of your revenues, right, and you continuously hire, then your investors are really upset. Right? Because you basically go and you basically burn through a lot of cash. So I think I'd say you basically put your best forward on the revenue side. You know, you've bottom up and top downed it and all the assumptions make sense. But it really goes back to the fundamentals of revenue operations to look at the entire bow tie. Right? And this is not just the top of funnel. This includes expansion opportunities, renewals. Right? And so, like, that is essentially the balancing act of a bottom up plan, and it's really, really hard to do well in my mind because there's a lot of complexity. I know, Philip, you love the complexity RevOps complexity chart from Hillary. Right? Like, which I think applies here very much.

Philipp Stelzer: Yeah. I mean, I also wanna say, right, I think it's totally fair to do an annual planning where you basically have, like, a north star that is centered around new logos. Right? It's better to do no annual planning than to, you know, just maybe do, like, a very focused and, like, clear one that is maybe lower in complexity. I think, you know, sometimes you have organizations and also people within organizations that always dream of the most complex, sort of, like, you know, setups that they can imagine. And they think it's desired to have, like, an extremely complicated system because that's, like, somehow cool. I don't know. Definitely seen it in the past. But it can also be good just to do annual planning, you know, where you basically say, okay. We do an annual planning on new logo, and, you know, that's sort of, like, the key focus. Because this is the key like, that then I've seen something that's something I've seen quite a few times. The basic company says, like, okay. This is our key focus. Like, this year is new logo acquisition because that's something we can focus on, and we can really streamline our efforts on this effort. Obviously, it doesn't mean, like, existing customers get, like, fully neglected. Right? But that maybe, like, you think your best bet at the moment is to focus on new logo acquisition and less so on expansion. It could also be the other way around. Right?

Janis Zech: Exactly. I mean, I think that's always a question, like, of maturity. Right? Like, where do you sit in the, like, product life cycle, and that might be also different by products. But I think that, like, at least in my experience, the existing business is often measured by GRR and NRR. Right? So NRR taking into consideration the expansions, GRR minus the expansions. And what I think you often see is that there's a lot less uncertainty than on the new logo acquisition. And the new logo acquisition is so uncertain because it is a combination of the quality of the salespeople that often fluctuate a lot. So you have a lot of, like, kind of execution risk, I would call. And then the challenge on pipeline generation being changing so quickly. Right? AEO, or GEO, however you wanna call it, on the top of funnel, right, like optimizing for chat based systems to find you, that wasn't around two years ago. LinkedIn didn't play a role five years ago. Like, you know, it basically, I think, and then, you know, like, outbound is completely changing. Right? All these things still work, but they're just changing a lot and drastically. And so for an existing organization that does, like, fifty, a hundred, five hundred million revenue. Right? And you have an existing large team that knows SEO but doesn't know the other piece. Right? Like, they suddenly need to shift. And then you don't have the historical data to, like, conclude what would be good things because you're almost like it's almost like a new channel. So I think, yeah, I think that's a great point for the, like, you know, like, maybe more granular on the thing that is more challenging and then looking at the historicals more for the things that are more known.

Philipp Stelzer: Yeah. Maybe last comment on that, and then I'll stop talking. Like, I think a lot of companies have seen this as well. It's like they like, the GRR and NRR have been very stable. And then suddenly, the last couple of years, there's a lot of companies falling out of product market fit because also the products are fundamentally changing. And, I mean, that's the other challenge, I think, on the existing customer side that what used to be great is maybe not good enough anymore or your market has become more crowded or, you know, you somehow lost the ability to innovate. And so suddenly, you know, there's a change happening in your market. And I think you like, most markets have become a lot more competitive because of either consolidation or new entrants. So it's interesting. Right? I think these are factors that influence your longer term planning, whether it's like one year or two year or three year. And, like, I think, you know, so it's a long way of saying, like, there's certain things in terms of decisions you're making on the go to market side and on the product side that actually influence your annual plan that you don't think about when you do annual planning, which I find quite fascinating, actually.

Janis Zech: Yeah. Yeah. I mean, yeah, I mean, all the time. Right? I think which is also why we have an episode on continuous planning instead of, like, going with annual planning. So, again, give that a listen. I think it's also a really good episode and also, I think, makes a lot of sense as a model. But, like, generally, right, like, if you don't do any planning at all, I mean, like, start with, like, a very focused, I don't know, new logo, annual planning, even if it's just initially between sales and marketing. And then step by step, you can increase, like, the people that you include and make it more complicated and so on. But it's best to start with something, if you don't do it at all right now, because this is like forecasting. It takes time. It's training a muscle. It's like getting people on board. It's creating a culture around planning and so on. Right? So it's like, the bigger the ship, the longer it takes. You know how it goes.

Philipp Stelzer: You know how it goes. Yeah. So I think, so, basically right. So you've taken care of the foundations. You have alignment on the goals. You have a timeline. You have the stakeholders defined. You know, like, the models that you need to plan for, so capacity, pipeline generation, hiring, enablement, and so on. You set targets based on this. Right? And, ideally, you set targets that are, you know, best case, worst case, like, you know, sort of, like, the base case. You know, so you create these different cases. Don't just do, like, a minus ten plus twenty percent calculation. Maybe also think about what could impact it. Right? So why would it be better? Why would it be worse? What are the ripple effects of this? You don't need to calculate everything out, but I think just having that list is probably, like, a good thing because those are things you can look out for. Like, what could turn this into, like, a, you know, like, sort of, like, downside case, what could turn us into upside case, what are the factors that you think have the biggest impact here? And then, yeah, I mean, basically, you wanna create, like, as much alignment as possible within these different planning groups before you actually have the planning meeting. Right? So the meeting itself is basically like a board meeting. It's more like a sign off based on everything that was discussed beforehand. You don't wanna create, like, a huge discussion. You don't wanna create, like, tension or anything. You wanna clear all of this up beforehand. So you have these different workshop formats that you can go through. Right? And, obviously, when it's about compensation, right, so that should be aligned before, FP&A should be aligned before, enablement should have a clear plan and so on. So that in the end, it's really just about bringing it all together, talking it through one more time, and then, you know, just, you know, kinda like putting your signature below it and signing it off or letting the board do that. So, yeah, I think, you know, what I wanna say here basically is don't create a lot of plans and then do, like, an annual planning session for three days, and then you think after those three days, everything is done and dusted. All of this needs to happen beforehand. People need to come very well prepared. We actually have a cheat sheet on this where we outline a lot of different sort of, like, workshop formats that you can try out. So give that a go under get weflow dot com slash resources. I think that would be extremely useful to take a look at after this episode.

Janis Zech: And then I think you should be good to go to make this a success. Yeah. I mean, I think, like, the outcome, as you alluded, is obviously the board approval, but then the real work starts in terms of operationalizing the plan. I think one thing that always comes up also within that plan is the territory design, right? Like doing a review and maybe some adjustments to your existing territory grouping. We had Jeremy Donovan on the show to talk about that, episode forty two. Highly recommend it. And, yeah, I won't go deep into it now because I think it's a bigger topic, deserves more time. But yeah. I mean, look. I think check out the cheat sheet, and thanks for listening. I hope this is helpful, and all the best for, you know, wrapping up your plan, wrapping up Q4, and then all the best for starting next year. We'll be back with some guests soon. And, again, thanks for listening.

Philipp Stelzer: Yeah. Thank you so much.